|Title||We believe Disney will continue to ride high for rest of the year|
|Description||We believe Disney will continue to ride high for rest of the year driven by continued business from Frozen in international markets and the recent release of Marvel’s Guardians of the Galaxy . Accordingly, we estimate 2014 studio entertainment revenues to be north of $6.6 billion. Also the demand for Frozen merchandise remains considerably high across the globe and this led to a 16% jump in consumer products revenues and 25% jump in segment operating income to $273 million. Steady Growth in Theme Parks Theme parks continued to show steady growth in the U.S. Overall revenues for the June quarter were up 8% while the operating income jumped 23% to $848 million.This can be attributed to higher guest FIFA Coins spending and attendance at its theme parks. Easter holidays further aided the attendance growth during the quarter. Theme parks have been growing steadily for Disney over the past few years and we expect this trend to continue in the near term as well as in the long run, driven by continued growth in attendance and guest spending amid economic recovery. The company’s management in its earnings call confirmed plans to bring Star Wars to its theme parks.This is big news for Disney since Star Wars has a huge fan following across the globe. Similarly, Harry Potter series has a huge fan following and its arrival at Comcast’s Universal Studios significantly boosted the attendance at the theme park. The way Harry Potter has been a turnaround story for Universal studios, Star Wars could well be for Disney. It must be noted that Disney is also developing Avatar Land themed on the blockbuster Avatar by James Cameron at Animal Kingdom in Florida, and the park is expected to open by 2017. These new attractions will boost the attendance at its theme parks and drive growth in the coming years. Our revenue forecast for 2016 currently stands at $17.83 billion driven by the benefits from the new resort in Shanghai that may open towards the end of 2015. Higher Programming Costs at ESPN Weigh Over Media Networks Business Media Networks saw 3% growth in revenues to $5.51 billion while operating income was flat at $2.29 billion.The operating income was lower due to a combination of higher programming cost at ESPN, lower recognition of previously deferred affiliate revenue and the absence of contribution from ESPN U.K.The company may see continued benefits of the FIFA World Cup broadcast in the next quarter. Affiliate fees at its media networks grew by a mere 1% during the quarter to $2.85 billion. However, the company stated that it expect affiliate revenue to return to high-single-digit growth in the next quarter as well as for the full fiscal year.We estimate the overall media networks revenues to be around $21.5 billion in 2014, reflecting growth of 4% over the prior year.|
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